Kinder Morgan to Acquire Premier Midstream Position in Bakken

Agrees to Purchase Hiland Partners for Approximately $3 Billion in
Accretive Transaction

January 21, 2015 04:02 PM Eastern Standard Time

HOUSTON--(BUSINESS WIRE)--Kinder Morgan, Inc. (NYSE: KMI) today announced a definitive agreement
whereby KMI will acquire Hiland Partners (Hiland) from its founder,
Harold Hamm, and certain Hamm family trusts, for a total purchase price
of approximately $3 billion, including the assumption of debt. Hiland’s
assets, which are mostly fee based, consist of crude oil gathering and
transportation pipelines and gas gathering and processing systems,
primarily serving production from the Bakken Formation in North Dakota
and Montana. The transaction creates a premier midstream platform for
KMI in the Bakken with a significant amount of acreage dedicated under
long-term gathering agreements. These acreage dedications are with some
of the Bakken’s largest and most successful producers, covering some of
the most attractive and economically viable areas in the basin. Hiland’s
customers include Continental Resources, Inc. (Continental), Oasis
Petroleum Inc., XTO Energy Inc., Whiting Petroleum Corporation and Hess
Corporation, among others.

Hiland’s crude oil gathering systems, located in North Dakota and
Montana, consist of approximately 1,225 miles of gathering pipelines
that deliver crude oil to the basin’s major takeaway pipelines and rail
terminals. At closing, the crude oil gathering systems will have more
than 1.8 million acres dedicated under long-term, fee-based agreements
with major Bakken oil producers. At closing, Hiland’s largest oil
gathering dedication will be with Continental, which has dedicated the
majority of its Bakken acreage to Hiland’s gathering systems under a
long-term agreement, including substantial acreage in McKenzie,
Mountrail and Williams counties in North Dakota.

Hiland’s crude oil transportation pipeline, the Double H Pipeline, is a
485-mile pipeline that will transport crude oil from Hiland’s Dore
Terminal in North Dakota to Guernsey, Wyoming, where Double H
interconnects with Pony Express Pipeline for further transportation to
Cushing, Oklahoma. Double H Pipeline is in the final stages of
construction and is expected to begin service by the end of the month.
Double H Pipeline will have an initial capacity of approximately 84,000
barrels per day, with an expansion to approximately 108,000 barrels per
day in 2016. The pipeline has firm take-or-pay contracts for
approximately 60,000 barrels per day and is currently conducting an open
season for additional commitments.

Hiland’s gas gathering and processing systems in North Dakota and
Montana consist of approximately 1,800 miles of gathering pipelines and,
upon completion of a plant expansion in 2015, 240 million cubic feet per
day of gas processing capacity and 30,000 barrels per day of
fractionation capacity. These systems process associated gas from oil
production and have approximately 3.7 million acres dedicated under
long-term agreements with major Bakken oil producers. Additionally,
Hiland’s Midcontinent systems gather and process gas in the Woodford
shale and other areas of Oklahoma.

“We are delighted to establish a substantial midstream footprint in one
of the most prolific oil producing basins in the United States,” said
KMI Chairman and CEO Richard D. Kinder. “Hiland’s systems serve some of
the Bakken’s largest and most successful producers, including
Continental. We look forward to continuing to provide high quality
midstream services to these producers and pursuing incremental growth
opportunities in the basin.”

Based on its long-term forecast for Hiland, KMI expects that the
multiple of EBITDA paid for Hiland, including future growth capital
investments, will decline to approximately 10 times by 2018. The
acquisition is expected to be modestly accretive to KMI’s cash available
to pay dividends in 2015 and 2016 and approximately six to seven cents
accretive beginning in 2017.

“Kinder Morgan’s projections for Hiland are reflective of the current
commodity price environment. While Hiland’s gathering systems serve some
of the Bakken’s and North America’s most economic acreage, the
projections incorporate announced reductions in drilling activity by
Hiland’s customers,” explained Kinder. “Although Hiland’s cash flow is
largely fee-based, our projections are based on commodity prices
consistent with the current forward curve for the portion that is
sensitive to commodity prices.”

“Through the hard work of its employees, Hiland has become a premier
midstream company. This transaction is about expanding our midstream
footprint and Hiland’s employees will be a critical part of that
growth,” said Kinder. “We expect this transaction will provide
opportunities for Hiland’s many talented employees.”

The transaction is subject to customary closing conditions, including
regulatory approval. Kinder Morgan expects to close the transaction in
the first quarter of 2015.

Kinder Morgan, Inc. (NYSE: KMI) is the largest energy infrastructure
company in North America. It owns an interest in or operates
approximately 80,000 miles of pipelines and 180 terminals. The company’s
pipelines transport natural gas, gasoline, crude oil, CO2 and
other products, and its terminals store petroleum products and
chemicals, and handle bulk materials like coal and petroleum coke.
Kinder Morgan is the largest midstream and third largest energy company
in North America with an enterprise value of more than $125 billion. For
more information please visit www.kindermorgan.com.

This news release includes forward-looking statements.These
forward-looking statements are subject to risks and uncertainties and
are based on the beliefs and assumptions of management, based on
information currently available to them.Although Kinder Morgan
believes that these forward-looking statements are based on reasonable
assumptions, it can give no assurance that such assumptions will
materialize.Important factors that could cause actual results to
differ materially from those in the forward-looking statements herein
include those enumerated in Kinder Morgan’s reports filed with the
Securities and Exchange Commission.Forward-looking statements
speak only as of the date they were made, and except to the extent
required by law, Kinder Morgan undertakes no obligation to update or
review any forward-looking statement because of new information, future
events or other factors.Because of these uncertainties, readers
should not place undue reliance on these forward-looking statements.